Liberty Mutual Fire Ins. v. Vafi CA2/4 ( 2022 )

Filed 3/15/22 Liberty Mutual Fire Ins. v. Vafi CA2/4
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FOUR
LIBERTY MUTUAL FIRE B312094
INSURANCE COMPANY, (Los Angeles County
Super. Ct. No. 20STCP02362)
Plaintiff and Appellant,
v.
MEHRANGIZ VAFI,
Defendant and Respondent.
APPEAL from an order of the Superior Court of Los Angeles
County, Laura A. Seigle, Judge. Affirmed.
Law Offices of Wolf, O’Connor & Myers, Marjorie Motooka; Clyde
& Co. US, Susan Koehler Sullivan, Brett C. Safford and Douglas J.
Collodel for Plaintiff and Appellant.
Law Offices of Burg & Brock, Scott A. Kennedy and Craig D.
Rackohn for Defendant and Respondent.
This appeal arises from an underinsured motorist arbitration
between respondent Mehrangiz Vafi and her insurer, appellant Liberty
Mutual Fire Insurance Company (Liberty Mutual). Based on Vafi’s
automobile policy, the arbitration was limited to determining the
damages that Vafi could recover from the underinsured motorist. The
arbitration expressly omitted from consideration the scope of Liberty
Mutual’s coverage under the policy. The arbitrator issued an award in
favor of Vafi for $335,983.42. Thereafter, Liberty Mutual tendered a
check to Vafi for $271,335.66 to cover her UIM claim. Liberty Mutual
arrived at that amount by deducting from the arbitration award offset
credits for a third-party settlement that Vafi had reached with the
underinsured motorist’s insurer ($50,000), and medical expenses
Liberty Mutual had paid under Vafi’s medical payment coverage
($14,647.76).
When the parties disputed the amount of coverage, Liberty
Mutual filed a petition in the trial court under Code of Civil Procedure
section 1286.6,1 to correct the arbitration award, and to confirm the
award. Conceding issues of coverage were not subject to arbitration,
Liberty Mutual nevertheless sought to correct the award with language
clarifying that Liberty Mutual was entitled to the offsets it had claimed.
The court denied Liberty Mutual’s request to correct the arbitration
award, and confirmed the award in a judgment. In doing so, the court
found that Liberty Mutual had failed to provide any legal authority for
the relief it sought, namely modifying an arbitration award by the
judicial adjudication of an issue that was not arbitrated.
1 Unspecified statutory references are to the Code of Civil Procedure.
2
On appeal, Liberty Mutual contends the trial court erred by
confirming the arbitration award without adding a provision to the
award entitling Liberty Mutual the right to offset its coverage to Vafi.
We conclude that the trial court correctly denied the petition to correct,
and affirm.
FACTUAL AND PROCEDURAL BACKGROUND
A. Pre-Arbitration Phase
In December 2017, Vafi was inside her car waiting for a traffic
light to change when she was struck by a vehicle driven by an
underinsured driver. Vafi suffered bodily injuries as a result.
Following the accident, Vafi was paid $50,000 by the driver’s insurer for
the driver’s policy limits. Vafi then filed a claim with her own insurer,
Liberty Mutual, under a personal automobile liability policy that
included coverage for uninsured and underinsured motorists (“UIM”).
The UIM coverage in Vafi’s automobile policy contained a limit of
$500,000 per accident. Liberty Mutual agreed to “pay compensatory
damages which an ‘insured’ is legally entitled to recover from the owner
or operator of an ‘uninsured motor vehicle’ [or underinsured motor
vehicle] because of: [¶] 1. ‘Bodily injury’ sustained by an ‘insured’ and
caused by an accident, and [¶] 2. ‘Property damage’ caused by an
accident . . . . With respect to coverage [for accidents caused by
underinsured motor vehicles], we will pay only after the limits of
liability under any liability bonds or policies applicable to the
‘uninsured motor vehicle’ have been exhausted by payment of
judgments or settlements.” The policy also reduced Liberty Mutual’s
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obligation to pay Vafi for sums it would have already paid under Vafi’s
medical payment coverage, and for any sums paid or payable by those
legally responsible for causing a car accident.
The UIM coverage in Vafi’s automobile policy also contained an
arbitration provision, which stated: “If we and an ‘insured’ do not
agree: [¶] 1. Whether that person is legally entitled to recover
damages under this coverage; or [¶] 2. As to the amount of damages;
then the matter will be settled by arbitration. . . . Disputes concerning
coverage under this part may not be arbitrated. [¶] . . . [¶] Any
decision of the arbitrator will be binding as to: [¶] 1. Whether the
‘insured’ is legally entitled to recover damages; and [¶] 2. The amount
of damages.”
Following several attempts at settling her UIM claim with Liberty
Mutual, Vafi formally demanded arbitration under the automobile
policy on September 25, 2019.
B. Arbitration Phase
The parties participated in arbitration beginning April 16, 2020,
and continuing for a half-day on May 1, 2020. The arbitrator (the
Honorable Jacqueline A. Connor, retired), issued her award on May 19,
2020. The award specified that the “matters at issue [were] the nature
and extent of Ms. Vafi’s injuries and damages.” Citing Insurance Code
section 11580.2,2 the award provided that the “‘damages’ recoverable by
2 The Uninsured Motorist Act (Ins. Code, § 11580.2 et seq.) requires auto
insurance policies to provide UIM coverage for motorists whose liability
insurance is less than the limits carried on the injured motorist’s insurance
4
the insured refers to the damages recoverable from the uninsured or
underinsured motorist. . . . It does not refer to the amount recoverable
by the insured from his or her insurer under the [UIM] policy.”
After summarizing the testimony presented during the arbitration
proceeding and making its own findings concerning Vafi’s bodily
injuries and damages, the arbitrator found “that the past economic
damages . . . totaling $35,983.42, were reasonable and attributable to
the accident. . . . [T]he need for continuing future monitoring and
physical therapy are awarded to [Vafi] in the amount of $100,000. Past
general damages to date are awarded in the amount of $100,000. . . .
[F]uture general damages in the amount of $100,000 are also awarded.
The total amount awarded is $335,983.42.”
Around June 2020, Liberty Mutual tendered a check to Vafi for
$271,335.66—a number it had calculated after deducting from the
arbitration award ($335,983.42) offset credits for Vafi’s third-party
settlement ($50,000), and medical expenses Liberty Mutual had paid
under Vafi’s medical payment coverage ($14,647.76).
In a June 23, 2020 letter to the arbitrator, Vafi requested
clarification as to whether she was “entitled to the full amount of the
award or is Liberty Mutual entitled to reduce the award by taking the
[offset] credit[s] even though no such evidence was introduced by them
plan. (Id., § 11580.2, subd. (p)(2).) As used in Insurance Code section
11580.2, the term “damages” refers to “bodily injury or wrongful death from
the owner or operator of an uninsured [or underinsured] motor vehicle.” (Id.,
§ 11580.2, subd. (a)(1).)
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at the time of the arbitration.” In its own letter to the arbitrator,
Liberty Mutual noted that it was contractually entitled to offset its
payment for the third-party settlement and medical payment coverage.
On July 6, 2020, the arbitrator issued a ruling upholding the
award as submitted. The arbitrator construed Vafi’s request as a
motion to correct the award, which was beyond the jurisdictional 10-day
timeframe. (See § 1284.)3 The arbitrator also noted that the issue of
offsets “was not requested nor articulated orally in the hearing or in any
of the briefs.”
Two days later, Vafi requested that the arbitrator reconsider her
ruling. The arbitrator again denied Vafi’s request, this time noting that
she no longer had jurisdiction to make any change or correction. (See
§ 1284 [an arbitrator may correct an award no later than 30 days after
service of a signed copy of the award on the applicant seeking
correction].)
C. Post-Arbitration Phase
On July 23, 2020, Liberty Mutual filed a petition to correct and
confirm the arbitration award under section 1286.6, subdivisions (b)
and (c).4 The petition requested that the court confirm that the “award
3 Under section 1284, a party may submit an application to “correct” an
award “not later than 10 days after service of a signed copy of the award on
the applicant” seeking a correction.
4 A party to an arbitration in which an award has been made may
petition the court to confirm, correct, or vacate the award. (§ 1285.)
As provided in section 1286.6, the grounds for the correction of an
award include “(b) The arbitrators exceeded their powers but the award may
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of $335,983.42 was and is exclusive of contractual and statutory offsets.”
In support, Liberty Mutual argued that under the terms of Vafi’s policy,
it was entitled to offset the third-party settlement and payments it had
made on behalf of Vafi under the medical payments coverage.
In her opposition, Vafi argued that no grounds for the correction of
an arbitration award existed under section 1286.6, “and thus the [c]ourt
must confirm the award as rendered.” Vafi further argued that because
setoffs were “[p]art and parcel of her damages,” and because the parties
“did not stipulate to remove the issue of setoffs from arbitration,”
Liberty Mutual’s right to setoffs was an issue to be decided in the
arbitration. Vafi also asserted that she had not received $14,647.76 for
prior medical expenses as alleged by Liberty Mutual.5
Relying on Furlough v. Transamerica Ins. Co. (1988) 203
Cal.App.3d 40 (Furlough) in its reply brief, Liberty Mutual argued that
the trial court had authority under section 1286.6 to correct the
arbitration award, which “embrace[d] matters outside the arbitration
agreement.” Liberty Mutual also argued it did not waive its offset
rights by the failure to introduce evidence at the arbitration, as the
parties had never stipulated to expand the scope of the arbitrator’s
be corrected without affecting the merits of the decision upon the controversy
submitted;” and “(c) The award is imperfect in a matter of form, not affecting
the merits of the controversy.”
5 Vafi alleged that she had only received $8,166.76 under the medical
payment coverage.
7
powers beyond those enumerated in Insurance Code section 11580.2,
subdivision (f).
The trial court held a hearing on the matter on January 28, 2021.
At the outset, the court informed Liberty Mutual that it had presented
“no authority that the court can clarify an arbitration award that was—
or consider evidence that was not put in front of the arbitrator.” Liberty
Mutual responded that its request fell under section 1286.6, subdivision
(c), because “the award is imperfect. We’re not asking the merits of the
award or the outcome of the award be changed in any way. All we’re
asking for is a clarification.”
After taking the matter under submission, the court issued an
order denying Liberty Mutual’s petition to correct the arbitration
award, and confirming the award. The court noted that it was not at all
clear in what manner the award was imperfect. The court continued:
Assuming Liberty Mutual was correct that the “issue of offsets is
outside the scope of the arbitration and the only issue submitted to
arbitration was the amount of damages [Vafi] suffered, . . . [Liberty
Mutual] still did not submit legal authority allowing the [c]ourt to
modify or clarify an arbitration award. Having told the arbitrator that
it would be error for the arbitrator to clarify the award and that no
clarification or modification was needed, [Liberty Mutual] does not
explain how—or provide legal authority that—the [c]ourt can do what
[Liberty Mutual] said the arbitrator could not do.” The court noted that
adding the additional language requested by Liberty Mutual was not
merely a matter of correcting an award that was imperfect in form and
that did not affect the merits of the arbitration award.
8
On February 18, 2021, the court entered judgment in favor of Vafi
for $335,983.42 “as the prevailing party in this action against” Liberty
Mutual. Liberty Mutual timely appealed.
DISCUSSION
The issue in this appeal is whether the trial court had the
authority under section 1286.6 to “correct” the arbitration award with
language clarifying that the “award . . . was and is exclusive of
contractual and statutory offsets.” We conclude that the trial court in
this case was correct in ruling it did not have that authority. The scope
of the arbitration was limited to determining whether Vafi was entitled
to recover an amount of “damages” as that term was used in her policy
and is understood in Insurance Code section 11580.2. (See Storm v.
Standard Fire Ins. Co. (2020) 52 Cal.App.5th 636, 643–644; Bouton v.
USAA Casualty Ins. Co. (2008) 43 Cal.4th 1190, 1197, 1200.) It did not
include the matter of potential offsets.
A. Judicial Review of Arbitration Awards
An arbitration award under a UIM policy has the force and effect
of a contract between the parties until it is vacated or confirmed with a
judgment entered in conformity therewith. (See §§ 1287.4, 1287.6;
Cinel v. Christopher (2012) 203 Cal.App.4th 759, 765; Pilimai v.
Farmers Ins. Exchange Co. (2006) 39 Cal.4th 133, 141.) To obtain a
correction of an arbitration award before it is confirmed, a party must
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file a petition with the trial court setting forth the statutory grounds on
which the correction is sought. (See §§ 1285, 1285.8.)
A court’s review of an arbitration award is expressly limited to the
statutory grounds for vacating an award under section 1286.2, or
correcting an award under section 1286.6. (Moncharsh v. Heily & Blase
(1992) 3 Cal.4th 1, 33 (Moncharsh); see Branches Neighborhood Corp. v.
CalAtlantic Group, Inc. (2018) 26 Cal.App.5th 743, 750 [judicial review
is “‘extremely narrow’” because of “‘the strong public policy in favor of
arbitration and according finality to arbitration awards’”].)
The “exclusive means” for correcting an arbitration award appear
in section 1286.6. (Moncharsh, supra, 3 Cal.4th at pp. 24, 28; M. B.
Zaninovich, Inc. v. Teamster Farmworker Local Union 946 (1978) 86
Cal.App.3d 410, 416.) As relevant here, section 1286.6 provides that
the court “shall correct the award and confirm it as corrected if the
court determines that: [¶] . . . [¶] (c) The award is imperfect in a
matter of form, not affecting the merits of the controversy.” Section
1286.6 does not authorize a court to reconsider the merits of the original
award, make a new award under the guise of correction of the award, or
add a new element of damages not covered in the award as rendered.
(Landis v. Pinkertons, Inc. (2004) 122 Cal.App.4th 985, 992; Severtson v.
Williams Construction Co. (1985) 173 Cal.App.3d 86, 93, 95.) Section
1286.6 does not authorize “a revision in substance” in which a court
“add[s] an element of damages not covered . . . in the award as
rendered.” (Banks v. Milwaukee Ins. Co. (1966) 247 Cal.App.2d 34, 37
(Banks).)
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Whenever a party files a petition to confirm, correct, or vacate an
arbitration award, the trial court must confirm the award, correct the
award and confirm it as corrected, vacate the award, or dismiss the
proceeding. (§ 1286; Soni v. SimpleLayers, Inc. (2019) 42 Cal.App.5th
1071, 1085.)
We review the trial court’s order confirming the arbitration award
de novo to determine whether the award can be corrected under the
grounds listed in section 1286.6. (See EHM Productions, Inc. v. Starline
Tours of Hollywood, Inc. (2018) 21 Cal.App.5th 1058, 1063–1064;
Glaser, Weil, Fink, Jacobs & Shapiro, LLP v. Goff (2011) 194
Cal.App.4th 423, 433.)
B. No Statutory Ground Exists to Correct the Arbitration Award
Relying on subdivision (c) of section 1286.6, and Furlough, supra,
203 Cal.App.3d 40, Liberty Mutual contends that the court, through a
petition to correct an arbitration award, can “confirm the correctness of
the payment it tendered to Vafi as calculated by the Arbitration Award
minus the . . . offsets to which Liberty Mutual is entitled.” 6 In other
words, Liberty Mutual contends that under section 1286.6, the court
could modify the award by adjudicating a coverage dispute never
considered by the arbitrator. Liberty Mutual is mistaken.
6 In the trial court, Liberty Mutual argued that the court could correct
the arbitration award on two statutory grounds: subdivisions (b) and (c) of
section 1286.6. Liberty Mutual does not raise subdivision (b) of section
1286.9 on appeal, and that subdivision is therefore not in issue.
11
Subdivision (c) of section 1286.6 provides for the correction of an
award that is “imperfect in a matter of form, not affecting the merits of
the controversy.” Notably absent from Liberty Mutual’s briefing is any
discussion or citation to relevant legal authority addressing section
1286.6, subdivision (c). “When an appellant fails to raise a point, or
asserts it but fails to support it with reasoned argument and citations to
authority,” we may treat the point as forfeited. (Benach v. County of
Los Angeles (2007) 149 Cal.App.4th 836, 852; see United Grand Corp. v.
Malibu Hillbillies, LLC (2019) 36 Cal.App.5th 142, 153 [courts may
treat as forfeited “‘conclusory arguments that . . . fail to disclose the
reasoning by which the appellant reached the conclusions he wants us
to adopt’”].) Liberty Mutual has thus forfeited this argument on appeal.
Even on the merits, Liberty Mutual’s argument fails. Under
subdivision (c) of section 1286.6, correction of an arbitration award can
be made only for “nonsubstantive matters of form that do not affect the
merits of the controversy.” (Century City Medical Plaza v. Sperling,
Isaacs & Eisenberg (2001) 86 Cal.App.4th 865, 877.) Several cases that
have utilized subdivision (c) to correct an arbitration award have done
so to clarify issues that had already been adjudicated during the
arbitrator.
In Britz, Inc. v. Alfa-Laval Food & Dairy Co. (1995) 34
Cal.App.4th 1085 (Britz), the parties agreed to arbitrate a large sale
and lease contract for miscellaneous plant equipment and machines.
(Id. at p. 1090.) The arbitrator issued an interim award in favor of the
defendants on liability in January 1992, and a final award in their favor
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in the amount of $587,425, “plus costs and attorney fees in an
unspecified amount” in March 1993. (Id. at p. 1091.) “After additional
submissions by the parties, the arbitrator . . . issued a supplemental
award of $1,412,953.75 for [the defendants’] attorney fees and
$696,747.45 as costs.” (Ibid.)
On appeal from a judgment confirming the arbitration award
including attorney fees and costs, the plaintiffs contended, inter alia,
that the arbitrator did not have jurisdiction to issue the supplemental
award for attorney fees and costs. (Britz, supra, 34 Cal.App.4th at
pp. 1093, 1105.) The court rejected the contention, and reasoned that
because the arbitrator’s January 1992 award did award attorney fees
and costs, the failure “to establish an exact dollar amount for the award
of fees and costs . . . is at most a defect in the form of the award” under
section 1286.6, subdivision (c). (Id. at pp. 1105–1106.) In other words,
the court found the omission of an exact dollar figure amount for an
award of attorney fees and costs constituted a non-substantive matter of
form subject to correction. (Ibid.)
In Krautner v. Johnson (1961) 189 Cal.App.2d 717 (Krautner), an
arbitrator issued an award in favor of the plaintiffs for “sums claimed
due therefor” for constructing a residence for the defendant. (Id. at
p. 718.) The original award stated that the plaintiffs “‘have
substantially completed the [construction] contract and are entitled to
the sum of $3,880.00, the total amount due under the written contract.’”
(Ibid.) This quoted language was “marked out, initialed by all
arbitrators, and the words ‘We find that the amount of the last payment
13
unpaid under the basic contract was the amount of $3,880.00’ were
added to the next paragraph and similarly initialed. Apparently this
form was forwarded to the parties, but before filing of the award with
the court, the page was retyped so as to show only the corrected form.”
(Ibid.)
On appeal from an order confirming the amended award, the
defendant contended that the alteration “vitiate[d] it.” (Krautner,
supra, 189 Cal.App.2d at p. 718.) The court disagreed, reasoning that
“the alteration, even if made after furnishing of copies to the parties, is
one of form only. It would be hypertechnical to hold that it voids the
award. [The] alteration was even more clearly but one of form, rather
than substance.” (Id. at p. 719.)
The foregoing cases used subdivision (c) of section 1286.6 to
correct an arbitration award on issues that had already been
adjudicated by the arbitrators. (See Britz, supra, 34 Cal.App.4th at
pp. 1105–1106 [correction made to specify a dollar figure amount for an
award the arbitrator had already adjudicated]; Krautner, supra, 189
Cal.App.2d at pp. 718–719 [correction made to rephrase a portion of an
award to more accurately reflect the grounds on which the arbitrator
adjudicated an issue].)
The correction sought by Liberty Mutual in this case pertains to
an issue that was never placed before the arbitrator. Indeed,
throughout the entirety of this litigation, Liberty Mutual has
maintained that the arbitrator did not, and could not, adjudicate a
coverage dispute under Vafi’s policy. Granting the relief requested by
14
Liberty Mutual would first require the judicial adjudication of a new
issue before supplementing the arbitration award under the guise of a
“correction.”
This type of judicial intervention is a not a correction of a matter
of form in an award, but “a revision in substance,” requiring a
recalculation of damages not covered in the award as rendered. (Banks,
supra, 247 Cal.App.2d at p. 37.) Modifying the arbitration award to
implement the offset provisions of the policy would reduce Liberty
Mutual’s liability to Vafi, and would subject the entire award to
vacation. (See Elliott & Ten Eyck Partnership v. City of Long Beach
(1997) 57 Cal.App.4th 495, 501–503; Krautner, supra, 189 Cal.App.2d at
pp. 718–719 [“[a] change in substance would require vacation of the
award . . . if it resulted in prejudice to either party”].)
Liberty Mutual’s reliance on Furlough, supra, 203 Cal.App.3d 40,
is equally misplaced. Furlough relied on section 1286.6, subdivision
(b),7 a statutory ground not asserted by Liberty Mutual in this appeal.
(See id. at pp. 46–47.) The circumstances under which Furlough was
decided are also distinguishable.
In Furlough, the plaintiff was injured by a hit-and-run driver
while driving a tractor-trailer rig that had been covered by various auto
policies with the defendant-insurer. (Furlough, supra, 203 Cal.App.3d
at p. 43.) The primary policy, which included UIM coverage with a limit
7 Section 1286.6, subdivision (b), not in issue in this appeal (see fn. 6,
ante), provides for the correction of an award if the arbitrator “exceeded [its]
powers but the award may be corrected without affecting the merits of the
decision upon the controversy submitted.”
15
of $300,000 per accident, was supplemented by two additional policies:
(1) a personal umbrella policy, which provided UIM coverage of $25,000
maximum per accident; and (2) a $1 million commercial umbrella
policy, which did not mention UIM coverage. (Ibid.) In his demand for
arbitration, plaintiff sought $1.3 million in damages, and asserted the
commercial umbrella policy provided a $1 million limit for UIM
coverage limit beyond the $300,000 limit under primary policy. (Id. at
p. 44.) Following arbitration proceedings, the arbitrator “rendered an
award ordering [the insurer] to pay [the plaintiff] $744,695 ‘as general
damages under the uninsured motorist provision on the policy.’” (Ibid.)
In response to the plaintiff’s petition to confirm the arbitration
award, the insurer sought to correct the award to $325,000,
representing the policy limits for UIM coverage. (Furlough, supra, 203
Cal.App.3d at p. 44.) In seeking a correction, the insurer argued that
the arbitrator had “exceeded his powers by making an award in excess
of the applicable policy limits.” (Ibid.) The trial court agreed, and
determined that the “commercial umbrella policy [did] not provide
[UIM] coverage; such coverage is limited to $325,000 as provided by the
primary policy and the personal umbrella policy.” (Ibid.) The court
entered judgment reducing the award to $325,000, and confirmed the
award as corrected. (Ibid.)
On appeal, the plaintiff contended that the parties had in fact
submitted to arbitration the question of policy limits, and “therefore the
award, which in effect determined that such coverage was afforded by
16
the commercial umbrella policy, is binding.” (Furlough, supra, 203
Cal.App.3d at p. 46.) The court rejected the plaintiff’s argument.
The court first noted that “[t]he record on appeal does not include
the papers purportedly submitted in the arbitration proceeding upon
which the [plaintiff’s] argument was based. Further, the trial court
issued no statement of decision, none having been requested. (Code
Civ. Proc., § 632.) Under these circumstances it must be presumed in
support of the judgment that the trial court resolved against [the
plaintiff] the issue of the parties’ claimed submission of coverage and
policy limits to arbitration.” (Furlough, supra, 203 Cal.App.3d at p. 46.)
The court continued: “An arbitration award which embraces matters
outside the agreement and not submitted to the arbitrator is subject to
modification under Code of Civil Procedure section 1286.6, subdivision
(b). (See Meat Cutters Local No. 439 v. Olson Bros. (1960) 186
Cal.App.2d 200, 204; Doyle v. Hunt Construction Co. (1954) 123
Cal.App.2d 51, 54.) The trial court impliedly determined that the issue
of the extent of [UIM] coverage was not submitted to the arbitrator and
therefore such issue was before the court for determination. (See
Allstate Ins. Co. v. Shmitka [(1970)] 12 Cal.App.3d 59, 63.)” (Furlough,
supra, at pp. 46–47, fn. omitted.) Therefore tasked with resolving this
issue in the arbitration award, the court in Furlough held that a
correction was required to reduce the plaintiff’s recovery from the
insurer to $325,000, as reflected as the UIM limits provided in the
primary policy and supplemented personal umbrella policy. (Furlough,
supra, 203 Cal.App.3d at p. 47.)
17
Liberty Mutual contends that Furlough “confirm[s] the validity of
its post-arbitration requests for offsets,” as that case “implement[ed]
Section 1286.6 to modify an arbitration award to reflect the amount an
insurer is obligated to pay.” Liberty Mutual reads Furlough much too
broadly. Absent from Furlough is any discussion on the issue of
contractual or statutory offsets for UIM coverage. Rather, the court’s
analysis was limited to determining whether the arbitration award
ordering the insurer to pay the insured $741,795 “embrace[d] matters
outside the agreement,” as the amount ordered was in excess of the
policy limits providing UIM coverage, but less than the policy limits of
all three policies. In other words, the court determined that the
arbitration award was subject to correction under section 1286.6,
subdivision (b), because it adjudicated a coverage issue that was never
submitted for arbitration.
The circumstances in this case are different. Here, the arbitration
proceedings were mandated under only one policy with UIM policy
limits of $500,000 per accident. The amount listed in the arbitration
award ($335,983.42) was in an amount less than the policy limit. The
arbitrator did not order Liberty Mutual to pay that specific amount, and
as discussed ante, the arbitrator was not asked to and did not rule on
any issue of coverage. Thus, under the reasoning of Furlough, the
arbitrator in this case never determined a coverage issue or policy limit
in excess of her powers. Furlough simply does not apply to the facts
before us.
18
Thus, because no statutory ground exists under section 1286.6 to
correct the arbitration award, we conclude that the court properly
denied Liberty Mutual’s petition to correct the arbitration award, and
correctly confirmed the award as final. (§ 1286.) As we shall now
discuss, however, Liberty Mutual is not without a remedy.
As raised for the first time at oral argument, counsel for Vafi
contends that the judgment entered in this case has “forfeited” Liberty
Mutual’s right to file a declaratory relief action to determine whether it
can offset its coverage to Vafi. To begin with, this new argument cannot
be raised for the first time in oral argument. (People v. Pena (2004) 32
Cal.4th 389, 403; BFGC Architects Planners, Inc. v. Forcum/Mackey
Construction, Inc. (2004) 119 Cal.App.4th 848, 854.) Even on the
merits, counsel has not demonstrated how a party may forfeit its right
to file a cause of action to determine an issue neither litigated nor
determined in a prior action. To the extent counsel argues the
judgment is res judicata as to any future cause of action to determine
scope of coverage issues, he is mistaken. (See Helfand v. National
Union Fire Ins. Co. (1992) 10 Cal.App.4th 869, 896 [res judicata
inapplicable to judgment confirming arbitration award that “did not
impact or determine rights as between the insurer and its insureds”];
Sandler v. Casale (1981) 125 Cal.App.3d 707, 713 [“the binding res
judicata effect of the confirmed award” did not bar declaratory relief
action to determine the parties’ rights and duties under the judgment].)
DISPOSITION
The order is affirmed. Respondent shall recover her costs on
appeal.
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NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
WILLHITE, J.
We concur:
MANELLA, P. J.
COLLINS, J.
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